Tourism bureau looks to hotels for more funding

CITY HALL ‚Äî The Convention & Visitors Bureau has requested a new tax on hotel stays that would raise cash to allow the marketing organization to compete with other cities by promoting Santa Monica in new international markets.

The proposal would create an assessment district that includes every hotel in Santa Monica with per-night room stays of $100 and more. The tax would go into effect Jan. 1, 2013 if hotel owners representing more than 50 percent of the total money raised by the tax agree to it. Almost 70 percent have already signed a petition requesting the district, according to a city staff report.

The tax would vary depending on the cost of the room, with an additional $2 charged for rooms between $100 and $200 a night, $3 for those up to $300 and $4 for rooms that cost above $300 per night.

The assessment would raise an estimated $3.1 million in addition to the roughly $2.5 million City Hall already contributes to the CVB each year.

Assessments can go up by 25 cents per year at the most, and the district expires on Dec. 31, 2017. Hotel owners can reevaluate the program at the beginning of each year. It takes the vote of owners paying more than 50 percent of the total assessment to end the district.

The extra funding would allow the bureau (CVB) to approach previously-untapped markets like Brazil, India and Mexico, said Misti Kerns, executive director of the CVB.

“There are still people in the world that have no idea where we are and what we‚Äôre all about,” she said. She hopes the new money would give the bureau the resources to change that.

Local hotels pushed for the assessment over two years ago as a way to increase the amount of money available to market Santa Monica as an international destination.

The international traveler is a catch ‚Äî they tend to stay longer than local visitors or people coming into Santa Monica on business, spend more money and often use public transportation to get around.

That means all the economic upside without nasty side effects like traffic, Kerns said.

“This isn‚Äôt about bringing in more people, this is about a targeted and strategic plan of stimulating markets compatible with the destination,” she said.

In proposing the fee, Kerns and the hotels both acknowledge that the existing level of funding isn‚Äôt doing the job.

The CVB is competing with its larger California neighbors for the same clientele, and many of them already have assessment districts for the same purpose.

Almost 70 have appeared across the state, and the majority of those were approved within the last three to four years. Other states are beginning to take notice and replicate the model, Kerns said.

Los Angeles already has an assessment for its downtown, which charges an extra tax on downtown hotels with more than 50 rooms.

“When you‚Äôre competing against cities like San Diego, San Francisco and Los Angeles, you have to be able to play the game on the same gameboard and have a game piece,” Kerns said.

Some hotels are very supportive of the proposal because they believe it could raise Santa Monica‚Äôs profile, which would benefit both the hotels through greater occupancy rates and City Hall through additional taxes levied on hotel rooms.

Santa Monica pulled in $32,747,300 in hotel room taxes in the 2010-11 fiscal year, and visitors spent a whopping $1.39 billion in 2011, according to City Hall and the CVB.

The Ambrose, a luxury hotel in the Mid-City neighborhood, is on board said Amita Patel, director of sales and marketing for the hotel.

“My experience is that it is a positive for the city because those funds go for the marketing of the destination,” she said.

Not all hotels are as sweet on the concept. Chris Metz, owner of the Sea Shore Hotel on Main Street had major reservations.

The Sea Shore Hotel, which has been family owned and operated since 1970, has 20 rooms that are usually full, Metz said.

“I‚Äôm not against something that would benefit us, but I don‚Äôt think that it‚Äôs going to benefit us at our little motel,” Metz said. “I‚Äôm against raising taxes again, and secondly I would rather put it back into my hotel personally instead of giving it to an organization.”

Metz plans to protest at the Nov. 13 City Council meeting, the date of the first public hearing about the district. Affected business owners will have a 45-day comment period before a final public hearing on Dec. 11.

If approved, the assessment will begin Jan. 1, 2013.

The assessment district has one other “kill switch” built into it meant to prevent City Hall from taking public funding out of the bureau. If existing levels of funding for marketing programs decrease, “it is the intention of the lodging businesses to petition to disestablish the (district).”

That is very unlikely because of the benefit that the CVB already brings to Santa Monica, said City Manager Rod Gould.

“Two million dollars is a lot of money, but I consider the investment in the CVB one of the best investments that the city makes,” Gould said. “It would have to be a dark day indeed when I recommend to the City Council to cut funding to the CVB.”